188.8.131.52 USDA Forbearance
USDA direct and guaranteed loans are eligible for CARES Act forbearance. With respect to guaranteed loans, the USDA essentially restates the provisions of the CARES Act. According to the USDA, “[u]pon completion of the forbearance, the lender shall communicate with the borrower and determine if the borrower is able to resume making regular contractual payments.”418 Consistent with FHA and VA, USDA has been allowing borrowers to start initial forbearance plans through the expiration of the COVID-19 National Emergency.419 Advocates should monitor for further updates due to the changing administration.
USDA has provided extended forbearance to guaranteed borrowers who started their plans by June 30, 2020, and who still need forbearance to manage pandemic related hardships.420 Borrowers meeting these requirements may receive an addition six months of forbearance beyond the twelve months already accessible. The six months of additional forbearance must be provided in three-month increments.421 Borrowers who start forbearance plans between June 30, 2020, and September 30, 2020 are allowed a maximum forbearance term of up to fifteen months. Borrowers accessing forbearance plans on October 1, 2020, or later may only receive up to twelve months of forbearance.
For direct loans, the USDA’s guidance refers to CARES Act forbearance as moratorium assistance and states that it can be requested verbally. It recognizes though that borrowers could still receive a standard moratorium even after the CARES Act protections have ended.
419 USDA, Update to Guidance for Servicing Borrowers Impacted by COVID-19 (Sept. 27, 2021), available at https://www.rd.usda.gov.
420 USDA, Press Release, Biden Administration Announces Another Foreclosure Moratorium and Mortgage Forbearance Deadline Extension That Will Bring Relief to Rural Residents, Release No. 0026-21 (Feb. 16, 2021); Federal Housing Finance Agency, News Release, FHFA Extends COVID-19 Forbearance Period and Foreclosure and REO Eviction Moratoriums (Feb. 25, 2021).
421 USDA, Update to Guidance for Servicing Borrowers Impacted by COVID-19 (Sept. 27, 2021), available at https://www.rd.usda.gov.